Tax Incentives for Employees
Advance Earned Income Tax Credit About Advance Earned Income Tax Credit Make sure your employees know about these tax credits! They may pay less in taxes and receive more money in their take-home pay-at no cost to you! The AEITC is simply an offshoot of the EITC which provides eligible workers with portions of their tax credits in advance of filing their Federal income tax returns. These "advanced" credits result in larger paychecks throughout the year, yet still provides tax refunds after filing Federal income tax returns. Employees taking home larger paychecks are more likely to be able to cover day-to-day expenses and are less likely to miss work. Who is Eligible for the Advance Earned Income Tax Credit? To be eligible, an individual meets all of the following criteria: - Have at least one qualifying child
- Have earned income and modified adjusted gross income of less than $29,201 ($30,201 if filing jointly)
- Be able to claim the Earned Income Credit on his or her federal income tax return
A qualifying child meets the following requirements: - Is a son, daughter, adopted child, grandchild, stepchild, or eligible foster child
- Has lived with the employee in the U.S. for more than half of the year (for the entire year, if a foster child)
- At the end of the calendar year is:
- under age 19, or
- under age 24 and a full-time student, or
- any age, if permanently and totally disabled
More About the Advance Earned Income Tax Credit The AEITC is added to the employee's net pay after normal deductions. Because it is not taxable, it does not add to your payroll taxes. You subtract advance payments from taxes ordinarily deposited with the IRS. The monthly benefit to your employee can be up to $115 extra in his or her paycheck. Many workers are unaware of the EITC and the AEITC. By telling your employees about these credits, you increase good will, resulting in more satisfied and productive employees. Best of all, this tax credit does not affect your company's cost of doing business! |
